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Foreign Office Investors Drive London Back to Pre-Crisis Levels

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United Kingdom  London  Square Mile  Michael Edwards  London Property Investment Trends 

Foreign Office Investors Drive London Back to Pre-Crisis Levels

By - Friday 25 January 2013

It is no secret that London is a bright spot in a bleak UK property market, or that the residential sector in the capital returned to pre-crisis levels long ago, but now the office sector has followed it. According to a new report by CBRE surging foreign demand for London offices brought £14 billion worth of investment into the capital's commercial sector last year, taking us back to pre-crisis levels.

In fact, according to the report 2012's investment volume of which two-thirds came from foreigners, was not only up 50% compared to 2011, but it was the third-highest on record beaten only by 2006 and 2007.

In recent years London has become one of the world's so-called safe-havens and this has brought massive demand from investors in Asia, the Middle East and the US, but investors from across Europe are also attracted by the transparent ownership and stable yields – let's face it, few European markets can match her.

According to CBRE foreigner commercial property investors have focussed on the City of London with buyers from the Middle East, Korea, Malaysia and China all closing deals worth over £100m during the year. Some £7.2bn was invested in the Square Mile, more than double the £3.5bn spent in 2011. Investment in the area known as Midtown – an office district spanning between Kings Cross and Holborn – hit its highest level since 2005, attracting £1.6 billion in commercial property investment, while the West End attracted £4.6 billion.

CBRE's Michael Edwards, who heads up the firm's central London capital markets division, expects foreigners will continue driving investment in the capital this year.

"If you consider the prevalence of high levels of debt at the top of the market, compared with more limited availability last year, this actually means that 2012 arguably saw a greater investment of equity in central London than ever before," he said.

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